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Big brand exodus is Elon Musk’s greatest challenge yet

November 19, 2023
in Science
Big brand exodus is Elon Musk’s greatest challenge yet
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Elon Musk is facing perhaps his sternest test yet as a mounting advertiser exodus hits the executive where it hurts the most, his wallet, and threatens the future of his social media platform in the process.

Musk over the weekend announced what he called a “thermonuclear lawsuit” against US-based media watchdog Media Matters, which had found corporate advertisements from the likes of IBM, Apple and others were being placed alongside antisemitic content, including posts praising Adolf Hitler and Nazis.

A growing parade of large media and technology companies including Disney, Apple and Warner Brothers have announced they would halt their advertising spend on X, uncomfortable with the perception of being associated with hateful content.

Elon Musk agreed with a post that said Jewish people hold a “dialectical hatred” of white people.

Elon Musk agreed with a post that said Jewish people hold a “dialectical hatred” of white people.Credit: Photographer: Tolga Akmen/EPA/Bloomberg

Musk himself helped fuel the disquiet, writing on X that he agreed with a social media post accusing “Jewish communities” of pushing “hatred against whites”.

That drew widespread condemnation, including from the White House. “It is unacceptable to repeat the hideous lie behind the most fatal act of antisemitism in American history at any time, let alone one month after the deadliest day for the Jewish people since the Holocaust,” White House spokesman Andrew Bates said in a statement.

Linda Yaccarino has been trying to stem the outflow.

Linda Yaccarino has been trying to stem the outflow.Credit: Universal

The entrepreneur has faced no shortage of crises in the past, but this mass advertiser exodus may be the hardest to come back from. Before this week’s firestorm, X had already revealed its advertising revenue was down around 60 per cent compared to the same time a year earlier, and a further loss could threaten the ongoing viability of the app.

X had already been crippled by significant staff and engineering losses, after Musk culled 80 per cent of the company’s headcount in a bid to aggressively cut costs. Those cuts also hit X’s content moderation teams, leading to what civil rights groups have described as an uptick in hate speech.

The company’s chief executive Linda Yaccarino has spent the past week moving to stave off the advertiser exodus, making public statements denouncing antisemitism. She wrote X had been “extremely clear about our efforts to combat antisemitism and discrimination”. “There’s no place for it anywhere in the world — it’s ugly and wrong. Full stop,” she said.

Much like Tesla’s chair, Australian corporate veteran Robyn Denholm, Yaccarino seems stymied in her efforts to rein Musk in.

Yaccarino said in a recent interview that X could be close to turning a profit in early 2024, but that claim was made before many of the company’s largest advertisers deserted it.

Meanwhile, Media Matters has hit back at the threat of a lawsuit. Its president Angelo Carusone issued a statement declaring that “if he does sue us, we will win”.

“Far from the free speech advocate he claims to be, Musk is a bully who threatens meritless lawsuits in an attempt to silence reporting that he even confirmed is accurate,” Carusone says in the statement.

“Musk admitted the ads at issue ran alongside the pro-Nazi content we identified.”

Musk, as he so often is, has again been his own worst enemy.

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The platform he bought for $US44 billion ($67.6 billion) last year is increasingly alienating its advertisers, and its users, becoming more like Donald Trump’s tech platform Truth Social, which is itself struggling to survive without advertising revenue, than the Twitter of old.

Attention in coming days will turn to which Australian companies will follow suit and join the likes of IBM and Disney in pulling their funding from X.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

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